Companies Are Spending Plenty On R&D And Software

Dr. Ed's Blog
In the GDP accounts, capital spending includes Structures (23%), Equipment (45), and Intellectual Property Products (32), where the numbers in parentheses show the percent of the current-dollar total during Q3-2013. Equipment includes information processing equipment, industrial equipment, transportation equipment, and other equipment. Intellectual Property Products includes software, research & development, and entertainment, literary, and artistic originals.

On closer inspection, what stands out is the extraordinary increases in spending on R&D and software both in current dollars and adjusted for inflation. In current dollars, the total is at a record $578 billion (saar), doubling since the end of 1998.

Spending on R&D and software combined has been running around 30% of total capital spending in recent years, doubling since the mid-1980s. The two categories currently each account for about 15% of capital spending. Thirty years ago, R&D was 11% of the total, while software was just 4%.